O'Sullivan v Stargate Operations Limited - [2014] NZHC 3193

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1359 [2014] NZHC 3193

BETWEEN
ANDY O'SULLIVAN

Plaintiff

AND

STARGATE OPERATIONS LIMITED First Defendant

MATTHEW JAMES BOWDEN Second Defendant

Hearing: 20 November 2014

Appearances:

Mr J D Turner for Respondent/Plaintiff
Mr N J Russell and Ms C R English for Applicants/Defendants

Judgment:

12 December 2014

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on
12.12.2014 at 4 pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

O'SULLIVAN v STARGATE OPERATIONS LIMITED [2014] NZHC 3193 [12 December 2014]

Background

[1] The plaintiff has brought proceedings against the defendants arising out of arrangements pursuant to which for some years he sold on behalf of the first defendant what are colloquially referred to as “party pills”. The plaintiff seeks judgment in the sum of $512,000.

[2] The business was operated by the first defendant. The second defendant is the sole director. It is accepted he was relevantly in charge of the business at the time of these events.

[3] The plaintiff has filed three iterations of the statement of claim. The second amended statement of claim is dated 10 November 2014. The claim appears to be brought against the first defendant based upon an admission of liability which the plaintiff alleges the first defendant admitted on 31 March 2013 that a sum of
$798,037.50 was owing to the plaintiff and that $512,000 of that sum would be credited for the benefit of the plaintiff and paid directly to the Inland Revenue.

[4] He also sues the defendants in tort for breach of a statutory duty, namely the failure, refusal or omission to deduct PAYE or withholding tax and to transfer the sum of $512,129.23 to Inland Revenue or to the plaintiff. The plaintiff alleges that the first defendant was in breach of the Tax Administration Act 1994 and the Income Tax Act 2007 for failing to deduct the correct amount of PAYE and that the second defendant aided the first defendant in such breaches. In regard to this cause of action the sum of $512,129.23 is claimed.

[5] Next there is a claim against both defendants for “money had and received” in the sum of $512,000. It is alleged that the defendants owed the plaintiff $512,000 and that they had “provided no consideration to the plaintiff” for that sum. Instead they retained that amount for their own benefit. The plaintiff also seeks the declaration that the defendants hold that amount on trust.

[6] The plaintiff also sues for misleading and deceptive conduct pursuant to s 9 of the Fair Trading Act 1986. The deceptive conduct was an alleged representation to the plaintiff that the defendants represented that they would deduct and pay the sum of $512,000 while “not knowing nor intending and/or being reckless as to whether the sum of $512,000 would be so paid or not”.

[7] Next there is a claim against the defendants in the tort of deceit which contains allegations…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 3193
Decision Date: 12 December 2014

CaseChat Overview and Summary

In the High Court of New Zealand, the case of O'Sullivan v Stargate Operations Limited involved the plaintiff, Andy O'Sullivan, suing the first defendant, Stargate Operations Limited, and the second defendant, Matthew James Bowden, for various claims related to the sale of "party pills." The plaintiff sought a total of $512,000 from the defendants. The second defendant was the sole director of the first defendant and was considered to be in charge of the business at the relevant time.

The primary legal issues in this case were whether the High Court had jurisdiction over the claims made by the plaintiff against the defendants and whether the proceedings should be stayed pending resolution of similar claims made in the Employment Relations Authority (ERA). The defendants argued that the claims should be within the exclusive jurisdiction of the ERA due to the nature of the plaintiff's employment relationship with the first defendant.

The court considered the relevant legislative provisions and principles, particularly the Employment Relations Act 2000, which grants the ERA exclusive jurisdiction over employment relationship problems. However, the court found that some of the claims, such as the claim for breach of statutory duties under the Tax Administration Act, were within the exclusive jurisdiction of the High Court.

The court ultimately decided to stay the proceedings in the High Court until the resolution of the ERA proceedings. The court reasoned that a stay would prevent the parties from expending resources on misdirected interlocutory steps in the High Court and would ensure that relevant issues were not litigated twice. The court also noted that the stay order could be reviewed once the ERA hearing was completed and a decision was issued.

Orders